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Xinnix Ground School Questions and Answers Already Graded A first-time homebuyer ✔✔Someone who has never owned a home Move-up homebuyer ✔✔Currently owns, or has previously owned a home and ... is looking to move up in price, location, size, etc. Relocation Homebuyer ✔✔Purchasing a new home in a different city or state due to job transfer or personal desire Affluent homebuyer ✔✔Well seasoned in home buying process. Knowledgeable, financially savvy, busy. Empty-nester homebuyer ✔✔Experienced homebuyers looking to downsize due to age and no dependent children. Investor homebuyer ✔✔Well seasoned and knowledgeable about mortgage process. Rate sensitive, smarter, potentially impatient and time sensitive. Looking to close as quickly as possible. End lender in mortgage banking ✔✔correspondent lender End lender in mortgage brokering ✔✔wholesale lender Correspondent lenders ✔✔purchase closed loans from banks and mortgage bankers. Warehouse line of credit. Wholesale lenders ✔✔Table fund at closing. All closing docs in name of wholesale lender. Fannie Mae (FNMA) ✔✔Federal National Mortgage Association Freddie Mac (FHLMC) ✔✔Federal Home Loan Mortgage Corporation FHA ✔✔Federal Housing Administration VA ✔✔Veteran's Administration Non-agency loans ✔✔Comprise any loans not made by the 4 lending agencies Conforming loans ✔✔Any agency loan Jumbo loan ✔✔Any conventional loan that is in excess of the loan limits set by Fannie Mae and Freddie Mac. All jumbo loans are, by definition, nonconforming; the reverse, however, is not true. Conventional ✔✔A loan NOT insured by FHA or VA Non-conforming ✔✔Any loan that does NOT conform to Freddie Mac or Fannie Mae guidelines URLA ✔✔Uniform residential loan application. 1003. Construction loan ✔✔A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses. Construction-permanent loan ✔✔Same as Construction loan except that long-term financing replaces the interim financing upon home completion. Primary residence (owner-occupied, principal residence) ✔✔Residence that the owner physically occupies Secondary residence (second home) ✔✔Property purchased for occupancy but not considered primary residence. Such as a vacation home. Investment property (rental property) ✔✔Property purchased by borrower with no intention to occupy and is instead used to establish rental income cash flow. Primary residence > Second home > Investment property ✔✔Risk of default to lender rated lowest to highest based on property purpose. Single Family Detached ✔✔A dwelling with no shared walls, designed to be used by one household Single Family attached ✔✔Two or more dwellings sharing a common wall. Townhouses and condos Condominium ✔✔A separate living unit joined together by like units sharing common walls. Townhouse ✔✔A dwelling of two or three stories that attaches at sidewalls to other units; each person owns walls and air space plus property rights and yard of the unit Duplex, triplex, quadruplex ✔✔Properties that have 2, 3, 4 units respectively located in one building Planned Unit Development (PUD) ✔✔A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision. Fixed-rate mortgage ✔✔A mortgage where the interest rate and payments remain constant throughout the entire duration of the loan. Adjustable Rate Mortgage (ARM) ✔✔A loan characterized by a fluctuating interest rate, usually one tied to a specific index. Blend mortgage ✔✔AKA "term" and "hybrid" ARMs. An ARM that has a fixed rate at the beginning and transitions into an adjustable rate after a predetermined period of time. Denoted as 5/1 ARM in which the first number is it's fixed-rate period and the second is the adjustment period. "Balloon" mortgage ✔✔a mortgage in which the entire remaining balance of the loan is due in one single payment at the end of a predetermined amount of time unless extended or refinanced. Permanent buy down ✔✔Uses discount points to permanently reduced the interest rate for the term of the mortgage. Temporary Buydown ✔✔Temporarily reduces the interest rate at the beginning of the loan. Denoted like this: 3/2/1 Buydown in which the rate is decrease by 3% for the first year, 2% for the second, 1% for the third, and the note rate for the rest of the term. Adjustment period ✔✔on an adjustable-rate mortgage, the period of time between rate or payment changes Caps ✔✔Limits placed on payments, interest rates, or balance of a loan that cannot be exceeded. Initial cap ✔✔Limits the first rate adjustment upward or downward in an ARM Periodic Cap ✔✔Limits the amount the interest rate of an adjustable-rate loan may increase at any one adjustment period. If not initial cap, periodic cap is assumed. Lifetime cap ✔✔The maximum interest rate adjustment permitted over the life of the loan. Index ✔✔Benchmark interest rate to which an ARM is tied Margin ✔✔Fixed percentage added to index to determine fully indexed rate. ARM qualifying rates ✔✔If fixed term is 5 yrs or less, the qualifying rate is the lesser of 2% above the start rate or the fully indexed rate (whichever is higher). If greater than 5 yrs, use start rate. Calculating buydown costs ✔✔(Monthly savings X # of months buydown is in effect)/loan amount Acceptable borrower ✔✔Natural persons of legal age Co-borrower ✔✔the second applicant on the loan request Non-occupant co-borrower and co-signers ✔✔An individual that signs on the loan but does not intend to occupy the property. P.A.I.L. ✔✔Property, Assets, Income, Liabilities Property (in relation to PAIL) ✔✔A property's acceptability as collateral for a loan. Assets (in relation to PAIL) ✔✔Borrower's commitment to the property. i.e. equity, down payment, and cash reserves Income (in relation to PAIL) ✔✔The borrower's ability to repay the loan Liabilities (in relation to PAIL) ✔✔The borrower's willingness to repay the loan. Residential Mortgage Credit Report (RMCR) ✔✔Most accurate of credit reports. Eliminates outdated and duplicate information. Most common credit report. Bankruptcy ✔✔Chapter 7- Forgiveness of all debt, does not require repayment Chapter 13- Debt repayment plan, more forgivable if current on payments. Judgement ✔✔the final determination or decision of the court as to the rights and duties of the parties in a lawsuit. Will most likely need to be satisfied before being approved. Foreclosure ✔✔A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note Housing ratio ( Front end ratio ) ✔✔PITI/gross monthly income = Housing (front) ratio Total debt-to-income ratio (Back end ratio) ✔✔(PITI + monthly debt)/gross monthly income = Total DTI Ratio Conventional qualifying ratios ✔✔28/36 FHLMC 36 FNMA (back end only) FHA qualifying ratios ✔✔31/43 33/45 (new construction) VA qualifying ratio ✔✔41 Back ratio Conventional Income guidelines ✔✔Salaried employees: Current income as shown on paystubs Commission and bonuses: 2 year avg Part-time, overtime: 2 year avg Social security, child support, alimony: must continue for at least 3 years Conventional Debt guidelines ✔✔Installment: >10 payments remaining Revolving: All; If no required minimum payment stated, assume 5% of outstanding balance for FNMA loans Legal: Counted if >10 months remaining Daycare: Not counted FHA Income Guidelines ✔✔Same as conventional guidelines FHA Debt Guidelines ✔✔Same as conventional Guidelines VA Income guidelines ✔✔Must prove job stability: If just exiting military, must be working in same line of work. If working in different line of work, must wait 12 months Strict on job/career changes: 12 month wait generally required for changes in past 12-24 months. VA Debt guidelines ✔✔Same as conventional except that daycare is also included. Property tax calculation ✔✔Sales price X tax rate% = Annual property taxes Homeowners insurance Calculation ✔✔Sales price X .3% = Annual H.I. Mortgage Insurance Calculation ✔✔Loan amount X MI rate = Annual M.I. Cash to close calculation ✔✔Down payment = Sales price - loan amount or Sales price X % down Closing Costs = Loan amount X % (depends on lender) Prepaids = Sales price x % (typically 1-1.5%) Discount points if any Mortgage insurance, if applicable Subordinate financing ✔✔The use of a second mortgage to avoid PMI, non-conforming loan pricing, access equity in the home, or lower your monthly payment. CLTV ✔✔Combined Loan to Value = LTV1 + LTV2 Two types of 2nd Mortgages ✔✔True Second mortgages: Fixed rate, term, amortization Equity lines of credit: Works like a credit card. Borrower draw from it and then pays it back. Interim Financing ✔✔bridge or swing loan for short-term financing before a sale [Show More]

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